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Tuesday May 24, 2022

FSC gives govt five years to enforce interest-free banking system

Justice Dr Syed Muhammad Anwar read out the verdict that was reserved by a three-member bench of the Federal Shariat Court.

By Maryam Nawaz & News Desk
April 29, 2022
FSC gives govt five years to enforce interest-free banking system

ISLAMABAD: The Federal Shariat Court (FSC) on Thursday gave the government five years to implement an Islamic and interest-free banking system in the country, as the economic system of an Islamic country like Pakistan should be free of interest.

Justice Dr Syed Muhammad Anwar read out the verdict that was reserved by a three-member bench of the Federal Shariat Court. The court had reserved its verdict on April 12 after hearing all the parties and the attorney general, reported Geo News.

The verdict stated that abolition of riba is fundamental for an Islamic system, adding that any transaction involving riba is wrong. “The abolition of riba and its prevention is in accordance with Islam. The interest taken in any case, including debt, falls into riba. Riba is completely forbidden in Islam,” said the Federal Shariat Court.

The Shariat Court’s verdict also stated that interest given on external and internal loans by the government also falls under riba. “The government should ensure that internal, external loans and transactions should be made interest-free. Transactions with international institutions, including the IMF and World Bank, should be made interest free as well,” said the court.

The court stated that Islamic banking and a banking system free of interest are two different things. “Pakistan already has an interest-free banking system in some places but riba should end in Pakistan. The economic system of an Islamic country like Pakistan should be interest-free,” said the verdict.

The verdict stated that China, as per Islamic Shariat, is heading towards an interest-free banking system. It also directed the government to immediately remove the word interest from all banking and other laws.

The verdict also stated that the attorney general had informed them that it would take time to get rid of the interest-based system in the country. The Supreme Court’s Shariat Appellate Bench in 2001 had ordered the implementation of the order to abolish the interest system. The court, giving the government five years to implement an interest-free banking system in the country, ordered that such a system should be implemented in the country by December 31, 2027.

The court stated had Article 38-F been implemented years ago, riba would have ended. It added that the State Bank of Pakistan, in its report, had stated that 20pc of banking had shifted to the Islamic system. It added that five years is enough time to ensure the implementation of an Islamic and interest-free banking system in the country.

“The government is expected to present an annual report on the interest-free system in Parliament,” said the verdict. The court also declared the Interest Act 1839 and all laws and provisions facilitating interest as unlawful.

While hailing the FSC verdict in Riba case, Finance Minister Miftah Ismail tweeted, “We welcome the Federal Shariat Court (FSC) decision in the Riba case. The government and SBP will carefully study this important decision and then seek guidance and clarification from the FSC about the process, steps and time-frame to implement this decision."

Meanwhile, Jamaat-e-Islami (JI) Ameer Sirajul Haq, while welcoming the decision of the Federal Shariat Court (FSC) against riba (interest), has demanded of the government not to wait for five years and end the interest based system as soon as possible.

Talking to newsmen here on Thursday, he asked the government to convert the interest based system into the Islamic Shariat system. Sirajul Haq said that he was hopeful that the current government would not delay the matter like the previous government on different pretexts. He said that if we will feel that the government is creating any hurdles in implementation of the decision, then the government would be held accountable. He said that the nation should thank Almighty Allah after Jumaa prayers on this decision as the decision against the interest-based system was a big success.  

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